Hong Kong TV’s Dreams Dashed

Hong Kong Television Network’s chairman Ricky Wong Wai-kay gestures during a news conference in Hong Kong on October 16, 2013.

Telecom entrepreneur Ricky Wong made a big bet when he started Hong Kong Television Network, investing more than 900 million Hong Kong dollars (US$116 million) to hire hundreds of actors and staff who have produced more than 300 hours of original programming.

But the network’s dreams of making it big came crashing down Tuesday when the city’s government rejected HKTV’s application for a free television license.

Hong Kong’s Commerce and Economic Development Bureau said Tuesday that it would issue free TV licenses to the city’s two existing pay-TV operators, PCCW and i-Cable, a move that will effectively end a decadeslong duopoly between Television Broadcasts and Asia Television Ltd. in the free-to-air market. But it rejected the application from Mr. Wong, who has been vocal in his bid to challenge dominant broadcaster TVB.

A Facebook page created shortly after the announcement to enlist public support for Mr. Wong’s network had received more than 340,000 ‘likes’ as of midday Wednesday.

The Hong Kong government declined to comment on the rejection of HKTV’s bid, but Gregory So, secretary for commerce and economic development, said Wednesday that the network was less competitive than PCCW and i-Cable, which have been in the city’s pay TV market for 10 and 20 years, respectively.

HKTV was widely seen by the public as a frontrunner to win a TV license based on the large investments made since it submitted its bid at the end of 2009. It continued pouring money into the network even as the government repeatedly delayed the decision on new licenses due to staunch opposition from TVB and Asia Television.

“The news itself is shock to the management and to the staff as well…I believe this decision goes against public opinion,” Mr. Wong told reporters Wednesday, noting that the company will lay off 320 of its 500 employees. It employs 250 actors and actresses, many of whom were hired from TVB, one of the world’s biggest distributors of Chinese-language TV programming.

Mr. Wong criticized the government’s rejection as being “unfair, unreasonable and nontransparent.” He said he will reconsider the company’s strategy, and may distribute existing content to broadcasters outside Hong Kong.

Mr. Wong’s efforts caught widespread public support at a time when many residents have complained of a decline in the quality of programming at dominant broadcaster TVB because of a lack of competition. While the city has had two free TV companies and two major pay-TV service providers, only TVB produces capital- and labor-intensive programs such as serial dramas, while the other networks mainly air talk shows or importing programming from China and other parts of Asia.

HKTV had sought to specifically address that market gap, poaching actors and producers from TVB and Asia Television to help it to produce more than 200 hours of serial drama programming. In June, the company uploaded the premiere episode of its police drama “Borderline” to YouTube, where it has attracted more than 700,000 views to date.

Mr. Wong is no stranger to challenging operators in the telecommunications market, and he has a proven track record of competing effectively against much stronger rivals. In 1992, he founded City Telecom, which he led to successfully take market share from incumbents in the long-distance telephone market in the 1990s as well as in the broadband Internet market in the early part of the last decade. He set up City Telecom after returning to Hong Kong in 1992 from Canada, where he tried several ventures, including a botched attempt to sell women’s pajamas at flea markets in Toronto.

Last year, Mr. Wong renamed Hong Kong-listed City Telecom as Hong Kong Television Network after the company sold off its core telecom assets to fund the TV foray. The company’s shares soared up to 36% on Tuesday ahead of the government’s announcement, but fell as much as 39% on Wednesday after the license was rejected.